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4 Tips For Investing In Offshore Funds

Prepare an investment policy statement (IPS)

A respectable wealth manager should prepare an IPS document for their client, which is vital in order for the investor to make an informed investment decision. The investment policy statement should outline your investment objectives and risk tolerance, among other things. It should state your motives for investing in the offshore funds and that tax minimization or deferral is not one of the main factors behind your decision to invest offshore.

Offshore-Funds

Document discussions

It is important to clarify with your wealth manager what your objectives are and, if reducing taxes is not one of the primary reasons for investing offshore, explain that to your wealth manager.

Choose local if you can

If there’s an investment fund in your region that is equivalent in all important respects to the offshore fund you’re considering, you may want to choose the local investment instead in order to avoid any questions from the applicable tax authorities. It’s more than likely, that you may have difficulty finding an equivalent localized fund if the investment adopts an alternative strategy (something esoteric, and not simply a fund that purchases stocks on a long-only basis). If there is no localized equivalent investment fund that you’re aware of, be sure to document that fact.

Watch your cost amount

In general, if the value of your offshore investment is less than $100,000 USD in aggregate, you won’t have to report these assets to your tax authority. It is likely that your local tax authorities will raise this threshold, so it is advised that you keep abreast of all relevant tax laws and any changes to them pertaining to offshore investment.

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